H&M Receives $4.6 Billion in Orders after Issuing Environmental Bond

H&M has issued a $604 million bond offering that has attracted $4.6 billion in orders. Hold up...bonds? This isn’t CNBC.

Why we’re talking about it: These are sustainability-linked bonds (SLBs), which require H&M to use more recycled materials and reduce greenhouse gas emissions—and pay more interest if those goals aren’t met.

Bonding time: When a bond is issued, investors loan a company money for a specific period of time while receiving interest payments. In this case, demand from investors was so high that H&M was able to cut the interest rate in half.

The SLB market is small, but becoming increasingly popular among companies and investors looking to meet environmental goals.

• And H&M isn’t the first retailer to get involved. Last year, Chanel issued its first SLB offering at a ~$699 million price tag.

Big picture: Investors likeHelena Lindahl, a portfolio manager with Storebrand Asset Management who purchased the H&M bonds, believe SLBs can help curtail environmental harms. “If more retailers followed this route there will be a completely new industry for recycling clothes on a scale that is pretty far from where we are now,” she told Bloomberg.